Germany has raised €4 billion in green bond proceeds aimed at funding green expenditures and investments as part of its sustainability strategy. The new issuance was made through the re-opening of Germany’s 30-year Green Federal bond, maturing August 2050.
In a recent green bond presentation to investors, Germany’s Finance Ministry outlined the country’s initiative to develop the sustainable finance market, with plans to establish a green yield curve later this year following the issuance of a new 5-year green bond, and continuing the “twin bond” concept.
Germany has been one of the most active sovereign green bond issuers since its initial €6.5 billion, 10-year green bond offering in August 2020, going on to raise over €30 billion in green debt to date.
With its inaugural 2020 issuance, Germany launched a “twin bond” concept, by matching its green bonds with existing conventional securities with matching characteristics, including maturity and coupon, in order to highlight the value of the sustainability characteristics of the green securities, or the “greenium.”
The 30-year green bond, for example, currently trades at a 1.42% yield, representing a 2 bp greenium to its conventional 30-year counterpart.
The twin bond concept is part of the government’s efforts to “substantially strengthen and decisively develop the market for green and sustainable forms of investment,” according to the federal government’s website. In the next phase, the government plans to establish a green yield curve for the euro area, following the issuance of its 5th green bond, planned for Q3 2022.
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